NONLINEAR BUSINESS CYCLE DYNAMICS: CROSS-COUNTRY EVIDENCE ON THE PERSISTENCE OF AGGREGATE SHOCKS

We look for asymmetries in the dynamics of real GDP growth for the G7 countries, using a model by Beaudry and Koop that allows the depth of a recession to influence the rate of growth of output. We find evidence supporting these nonlinearities in four countries, including the United States, but we do not find evidence that the asymmetries are common even among the four countries exhibiting asymmetric behavior. A modification of the model to distinguish between the recession and recovery phases of a business cycle does not change this general finding. The asymmetries discovered by Beaudry and Koop do not appear to be common among the G7 nations. (JEL E32)     

Occupational Gender Segregation in Canada, 1981–1996: Overall,Vertical and Horizontal Segregation*

Cet article examine les changements survenus entre 1981 et 1996 dans la ségrégation hommes‐femmes. Le niveau de ségrégation dans son ensemble a faiblement baissé, suivant en cela la tendance observée depuis les années soixante. La diminution se traduit par une décroissance de 41% de la ségrégation verticale (équité salariale) mais par une augmentation de la ségrégation horizontale (différences autres que cette équité). Les femmes ont renforcé leur point d'ancrage dans la main‐d'?uvre à plein temps et élargi L'étendue de leur participation alors que celle des hommes dans des secteurs à temps partiel et moins prisés a augmenté, et que les emplois traditionnellement occupés par des hommes ont connu un déclin et ont vu L'arrivée des femmes. This article examines changes in gender segregation in Canada between 1981 and 1996. Overall segregation declined slightly. This is a continuation of a trend occurring since the 1960s. The decline comprises a 41% decrease in vertical segregation, representing inequality associated with occupational earnings, and increases in horizontal segregation, difference without such inequality. Women strengthened their footholds in the full‐time work force and diversified their breadth of participation, just as men's participation in part‐time and less desirable enclaves began to increase, and as traditionally male occupations experienced both decline and some influx of female workers.     

MORAL HAZARD, ASSET SPECIFICITY, IMPLICIT BONDING, AND COMPENSATION: THE CASE OF FRANCHISING

In franchising, many of the elements of moral hazard models merge. Issues of two-sided moral hazard, bonding, and asset specificity all play a role. We extend the literature by considering how asset specificity creates an implicit bond and affects incentive pay. This approach implies that if one party posts a larger bond, this improves their incentives and allows enhancement of the other party's incentives through a larger residual income claim. Our empirical work supports this approach. For example, reductions in the specificity of the franchisee's investment due to leasing lowers the royalty rate and raises the franchise fee. (JEL L14, 533)     

THE STATE OF THE FEDERAL BUDGET AND THE STATE OF THE ECONOMY: FURTHER EVIDENCE

Simultaneous monetary and fiscal policy reaction functions are derived and estimated for the 1969:2–1984.3 period. The results suggest that the Reagan administration has abandoned fiscal policy as a stabilization tool. Furthermore, although the average money growth rate declined in the Reagan administration, variation in the rate of money growth indicates that monetary policy has been used to combat unemployment. Finally, monetary and fiscal policies were not coordinated during this period. Rather, monetary and fiscal policy appear to be set by a Nash equilibrium in a non-cooperative game. In a Nash equilibrium, the policy chosen by each authority maximizes its payoff, given the policy choice of the other authority.     

DECOMPOSING TRENDS IN INCOME VOLATILITY: THE “WILD RIDE” AT THE TOP AND BOTTOM

We use 2‐year panels from the Current Population Survey to provide a detailed accounting of family income volatility from 1980 to 2009. Volatility doubled overall, and the increase was most pronounced among the top 1% of the income distribution, but in any given year the level of volatility among the bottom 10% exceeds that of the top. The increased volatility comes from higher instability of head and spouse earnings, other nonlabor income, and from reduced covariance between these income sources with the tax system. This suggests that current tax policy is less effective in mitigating income shocks than previous decades. (JEL J31, I30)